With only 2% of governments’ recovery spending going to clean energy transitions, global emissions are set to surge to an all-time high by 2023, says IEA in a new report.
EA’s Sustainable Recovery Tracker monitors governments’ fiscal responses to the Covid-19 crisis and estimates their impact on clean energy investments and global CO2 emissions. According to the analysis, governments worldwide are deploying an unprecedented amount of fiscal support aimed at stabilizing and rebuilding their economies, but only about 2% of this spending has been allocated to clean energy measures.
Among the report’s key findings is that the sums of money, both public and private, being mobilized worldwide by recovery plans fall well short of what is needed to reach international climate goals, specifically in emerging and developing economies.
Specifically, the Tracker shows the stark geographic disparities that are emerging in clean energy investment. The majority of funds are being mobilized in advanced economies, which are nearing 60% of the investment levels envisaged in the Sustainable Recovery Plan. Emerging and developing economies, many of which have limited fiscal leeway, have so far mobilized only about 20% of the recommended spending levels.
Under governments’ current recovery spending plans, global CO2 emissions are set to climb to record levels in 2023 and continue rising in the following years. This would leave the world far from the pathway to net-zero emissions by 2050 that the IEA set out in its recent Global Roadmap to Net Zero,
…the report reads.
- As of the second quarter of 2021, governments around the world have allocated around USD 380 billion on clean energy measures as part of their economic response to the Covid-19 crisis. This is around 2% of the total fiscal support in response to Covid-19.
- This government spending and new policies put in place since last year are expected to add an extra USD 350 billion a year to clean energy and electricity network spending between 2021 and 2023. This represents an increase of 30% over the levels seen in recent years.
- Yet, this is only 35% of the amount envisaged by the IEA Sustainable Recovery Plan to put the world on track for net-zero emissions by 2050, while boosting global economic growth and creating millions of new jobs.
- There are wide geographical differences in governments’ economic recovery measures. Most of the spending is in G20 economies. In advanced economies, recovery measures announced to date are expected to meet 60% of the investment needs set out for these economies in the Sustainable Recovery Plan.
- In emerging and developing economies, this share falls to 20%, where many countries focused their more limited fiscal leeway primarily on emergency health and economic measures. Some countries with more fiscal leeway may also be reticent to initiate large economic recovery spending programmes following the inflationary effects witnessed in the 2008 financial crisis.
- IEA analysis of over 800 policy measures across more than 50 countries shows that government spending for energy-related sustainable recovery measures has been primarily channeled through programmes that already exist such as energy efficiency grants, public procurement, utility plans and support for electric transport options.
- IEA estimates that full and timely implementation of the economic recovery measures announced to date would result in CO2 emissions climbing to record levels in 2023 continuing to rise thereafter. While this trajectory is 800 million tonnes lower in 2023 than it would have be without any sustainable recovery efforts, it is nonetheless 3 500 million tonnes above the pathway set out in the recent IEA special report Net Zero by 2050: A Roadmap for the Global Energy Sector.
Governments need to increase spending and policy action rapidly to meet the commitments they made in Paris in 2015 – including the vital provision of financing by advanced economies to the developed world. But they must then go even further by leading clean energy investment and deployment to much greater heights beyond the recovery period in order to shift the world onto a pathway to net-zero emissions by 2050, which is narrow but still achievable – if we act now,
…said Fatih Birol, the IEA Executive Director.